The Path to Monetization: Why Application Stores Will Further Fuel the Moblin Project Ecosystem

Why Application Stores Will Further Fuel the Moblin Project Ecosystem. Despite the broad adoption of mobile devices, the true power and value of the Moblin project-based mobile ecosystem has yet to be realized because it is still in its infancy.  That means there’s a lot of room for innovation and already software developers are building and distributing ground-breaking user interfaces and applications while OEMs and ODMs are creating the next generation of must-have devices. In the meantime, service providers are eyeing exciting new revenue opportunities that deliver higher levels of value to end. customers.                                                                                                                                                   

When consumers and industry insiders talk about the state of the art, it’s common for the sophisticated and unsophisticated alike to point to the Apple iPhone and the iPhone AppStore because they set respective examples of what smart phone user interfaces “should” look like and the applications and services consumers “should” be able to consume via such devices.  Nevertheless, in May 2009, the Apple iPhone lost its number one sales position in Q1 2009 to RIM’s Blackberry curve which had a positive psychological effect on non-Apple developers, OEMs and ODMs.  The shift was also an indication that there’s a lot of room for innovation and that the rules of the game are not set.

BenQ’s S6 smart phone and its slick UI have been getting global attention based on the “wow factor”, for example.  The device is available exclusively through Italian carrier TIM and consumers around the world want to know how soon they can get one through their local service providers.  The BenQ S6 uses the Intel Atom 800-Mhz processor and it runs on Red Flag’s Midinux operating system.

“People fail to realize how many Atom-based devices will ship this year,” said Larry Kettler, VP of Business Development at Xandros.  “Tens of millions of devices should be very attractive to ISVs.”

Xandros offers a Linux digital marketplace called CNR (Click-and-Run) that makes it easy to find, install and manage Linux content.  ISVs, OEMs and ODMs are using CNR to create revenue opportunities, deliver branded user experiences to customers and manage the software lifecycle on devices by providing automatic updates. The marketplace purportedly offers tens of thousands of Linux applications, as well as packages and libraries that install in a single click.  According to Kettler CNR powers applications for the ASUSTek (ASUS) Eee PC and supports other product initiatives based on Intel processors.

Xandros is working with more device manufacturers and ISVs than service providers but is open to working with all three. The point is to build a healthy device ecosystem that gives end users attractive new add-on features while creating new market opportunities and recurring revenue streams for developers and service providers.

“Consumers drive markets and the demand for products,” said Kettler.  “When companies focus on the customer everyone benefits.”

Xandros in the Center of Change

Cell phones and PCs were once very different devices but a modern phone does a lot more than just send and receive voice calls.  Xandros sees itself in the middle of the convergence of PCs and smart phones because it delivers applications to the device of choice regardless of operating system or platform.

“The traditional $1,000 PC is gone, so stakeholders are moving down the chain.  At the same time, smart phones are getting more powerful and delivering more capabilities so they’re moving up the chain,” said Kettler.  “Netbooks are the fastest growing segment of the PC market today.”

Both netbooks and smart phones provide a lot of computing power usually for less than $350 and there are other newer devices about to hit the market over the next year or two that will reflect the convergence even more.

Software distribution and application pricing are also changing and part of the change is driven by the existence of app stores.

“End users look at two things when it comes to applications:  What it does and the price,” said Kettler.  “Traditionally you’d buy packaged software for $99 or so and now you can get applications from an app store, often for less than $20 which shifts market expectations.”

Xandros has an ISV program that helps developers get their software packaged and uploaded.  ASUS has used CNR to develop a number of innovative applications for the Atom-based Eee PC.  Other developers offer games and business applications, among other things.

“We’re providing the platform and are letting the devices and consumers drive interest in the applications,” said Kettler.

Xandros also supports all sorts of revenue models including licenses, subscriptions, exclusive and non-exclusive licenses.  Developers can choose to offer completely free, free trial or commercial products.  Xandros is also exploring ad supported software.

“We’re open to supporting whatever revenue models make sense for individual developers,” said Kettler.  “Ad-supported software is new to us but we’re flexible and open to supporting [it].”

Xandros also supports complex licensing with third party developers in the case of multimedia applications.

Kettler says the benefit of an application store is the ecosystem it enables.  Consumers buy more applications and devices, service providers sell more services, OEMs/ODMs sell more devices, and developers sell more software.  App stores can also consolidate software across devices so consumers don’t have to go to five different websites to get applications for five different products.  Toward that end, Xandros is device agnostic and will support multiple device operating environments in one CNR platform in the future. An important benefit of this approach is that ISVs and service providers will also be able to manage software lifecycles across multiple device environments from one platform.

“We’re going to see a number of interesting devices in the near future so we’ll be providing even more connectivity to software and services,” said Kettler.

One interesting aspect of innovation has to do with content.  Content companies will be pre-installing content on devices, creating customer devices with the help of OEMs/ODMs and may also launch their own app stores.

Imagine a Star Trek branded device that provides instant access to audio, video, games, trivia and more on a netbook.  Marketers in all different types of industries are already trying to extend brands through branded applications, games, and widgets.  Viewed in that context, extending branding strategies to devices makes a lot of sense.  The question is, how many general purpose and use-specific devices will the average consumer adopt and why?

Xandros is dedicated to supporting its ecosystem from end-to-end as technologies and the needs of its constituencies evolve.  Already the company is working on next-generation integrated software solutions that will be good news for ISVs, OEMs/ODMs and service providers alike.